CFPB Raises HMDA Reporting Thresholds

The CFPB recently issued a final Home Mortgage Disclosure Act (HMDA) rule to increase the threshold to report closed-end mortgage loans from 25 to 100 originated loans in each of the prior two years, and to increase the permanent threshold to report dwelling-secured open-end lines of credit from 100 to 200 originated lines in each of the prior two years. The new closed-end loan threshold is effective July 1, 2020. The new permanent open-end lines of credit threshold is effective January 1, 2022, as a temporary threshold of 500 originated open-end lines of credit in each of the prior two years is in effect through 2021. The CFPB also issued an executive summary of the final rule, an unofficial redline of the changes to Regulation C, and other helpful materials.

As previously reported, in May 2019 the CFPB proposed to increase the closed-end loan threshold from 25 to 50 originated loans in each of the prior two years, and to increase the permanent open-end line of credit threshold from 100 to 200 lines in each of the prior two years, as well as extend the 500 originated lines temporary threshold through 2021. The CFPB also requested comment on a closed-end loan threshold of 100 originated loans in each of the prior two years. The CFPB later reopened the comment period on the proposals, establishing an October 15, 2019 date for comments. This was in response to comments from stakeholders that they wanted to review the 2018 HMDA data before submitting comments, and such data typically is released in the later part of summer. The 2018 HMDA data was the first data reflecting the expanded HMDA data fields added by the October 2015 final rule.

In October 2019 the CFPB issued a final rule extending the temporary 500 originated lines threshold for reporting open-end lines of credit through 2021, as the threshold was scheduled to expire at the end of 2019.

The CFPB had planned to implement the change to the closed-end loan threshold as of January 1, 2020, but the reopening of the comment period pushed the implementation date later into the year. The mid-year implementation of a higher reporting threshold for closed-end loans will result in some institutions that are currently HMDA reporting institutions becoming non-reporting institutions as of July 1, 2020. If an institution originated at least 25 closed-end loans in both 2018 and 2019, then as of January 1, 2020 the institution would have to collect, record and report HMDA data for calendar year 2020. As of July 1, 2020, if that institution originated fewer than 100 closed-end loans in either 2018 or 2019, it would no longer be a HMDA reporting institution (a “newly excluded institution”).

The CFPB provides guidance on how the mid-year implementation effects a newly excluded institution’s data collection, recording and reporting obligations under HMDA.

With regard to the collection of HMDA data, newly excluded institutions may cease the collection of data for HMDA purposes beginning on July 1, 2020. However, under the Equal Credit Opportunity Act and Regulation B, there is a separate data collection requirement for mortgage loans for the purchase or refinancing of the consumer’s principal residence.

With regard to the recording of HMDA data, newly excluded institutions still must record closed-end mortgage loan data for the first quarter of 2020 on their loan application registers within 30 days after the end of the first quarter. Newly excluded institutions will not be required to record second quarter data because the recording deadline is after July 1, 2020.

With regard to the reporting of HMDA data, newly excluded institutions do not have to report any HMDA data for 2020, even the data that was collected and recorded for the first quarter. However, newly excluded institutions may opt to report data for 2020, but to do so they must report data for the entire year.

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